Friday, February 29, 2008

Joff Wild Responds to "End Software Patents"

Understandably, great exception was taken to the bombastic claim that the software industry spends $11.4 billion dollars on patent litigation. From this morning's post:

Clearly, what the [End Software Patents] authors have done is take 55 [the number of cases alleged to be filed each week], multiply it by 52 [weeks] and then multiply that figure (2860) to get the $11.4 billion. In other words, they have assumed that every single case filed in the US ends up going to a final decision at the first instance. However, the truth is that the vast majority of patent suits are settled well before they get to court and so the litigation costs incurred are significantly less. Any patent attorney that End Software Patents had cared to ask could have pointed out this simple truth. But maybe it is just a litte too inconvenient.

It gets worse than that, however. At the end of the third bullet point, the authors of the report state that the source for their statistics is a debate at the Brookings Institute held in 2005. One of the people taking part in the debate was the very same Dan Ravicher of the Public Patent Foundation who is credited with the stat about 55 software patent suits being filed each week. But, in fact, according to the transcript, he said no such thing. Instead, he said (at page 33): "How many patent lawsuits are filed every week? And Brian [Kahn, of the University of Michigan] already hinted at this. That's about 55 [inaudible]. Now, what percentage of those lawsuits are software-related? A small percentage, so they're not all software patents. But we still have an increase in patent litigation. And the cost of defending oneself from a patent lawsuit, as Brian indicated the statistics show, from a year or two ago, I think
that data came out, $2 to $4 million for an average size patent case."

[W]hat we have here is spin, pure and simple. End Software Patents understandably wants to make a splash. It is the new kid on the block and feels it has to get its name out there so that it can start to have its voice heard. Unfortunately, however, it has chosen to do this by quoting figures that bear very little relationship to reality. Putting aside the various ethical issues in producing such dodgy data, what End Software Patents has done is wrong because these kinds of figures grab headlines and guide the debate. It is no coincidence that the organisation makes that $11.4 billion point one on its press release announcing the study's publication.


Read the post in its entirety here (link)

(Update)

. . . and read more on the fray in the comments below

Thursday, February 28, 2008

Costs of Patent Prosecution

When people decide to patent, the inevitable question of "how much will it cost?" comes up. While not everyone has a handy copy of each AIPLA cost survey, Alan Kasper, First Vice-President of the AIPLA, provided a brief glimpse into the costs involved in his testimony before Congress:

Average Cost of Preparation:

• Preparation and filing of an original application of minimal complexity (10 page specification, 10 claims) = $8,548.00.

• Relatively complex biotechnology/chemical cases = $15,398.00

• Relatively complex mechanical cases = $11,482.00

• Relatively complex electrical/computer cases = $13,684

The average cost for filing an Amendment

• Minimal complexity = $2,244.00

• Relatively complex biotechnology/chemical case = $4,448.00

• Relatively complex electrical/computer case = $3,910.00

• Relatively complex mechanical case is = $3,506.00

The government fees related to such filings are the same (unless the Applicant is a small entity) -- $1,030.00. The cost for filing an RCE is $810.00 plus a service charge (around $350.00). The cost for filing of a continuation application is $1,030.00 plus a service charge (around $585.00).

Dudas and Others Testify Before Congress

Yesterday, the Subcommittee on Courts, the Internet, and Intellectual Property Oversight held a hearing on the USPTO (link). The witness list included Jon Dudas, who published his remarks on the Committe on the Judiciary website.

An interesting comment appears on the second page of Dudas' testimony:

Our patent examiners completed over 362,000 patent applications in 2007, the largest number ever, while maintaining for the second year in a row an examination compliance rate1 of 96.5 percent, the highest in a quarter of a century. The allowance rate for patents is currently 44%. This is in contrast to allowance rates in excess of 70% just eight years ago.
While it is unclear what the context of this number is, it appears, judging by the comment, that lowering allowance rates is considered a "good thing" by the PTO.

Other areas covered by Dudas include:

Quality Review
Based on input on potential areas for consideration obtained through customer satisfaction survey data and other input from applicants and practitioners, the areas of final rejection practice, Request for Continued Examination (RCE) practice, search quality and restriction practice were identified for review during FY 07.
Accelerated Examination
1,096 petitions for accelerated examination have been filed to date with 344 granted and 271 pending. Of the 344 granted petitions, 114 have been allowed and 73 will have issued as patents by the end of this month. Our 12-month to completed prosecution (final rejection, allowance or abandonment) goal has been met for all applications.
The Peer-to-Patent Project
To date, 57 applications have been volunteered to participate in this pilot from over 15 different corporations and independent inventors. Over 170 pieces of prior art have been submitted to the 45 applications that have published so far in the pilot.
Information Disclosure Statements

The USPTO's proposed rule change is designed to encourage early submission of relevant information, and to discourage submission of information that is unimportant or does not add something new for the examiner to consider. With the proposed changes, patent examiners would not have to review documents that do not directly relate to the claimed invention, or that duplicate other information already submitted.

Under the proposal, applicants would still be able to send in as many documents as they choose. However, there would be more stringent requirements for those choosing to submit large numbers of documents or very long documents.

Central Reexamination Units (CRU's)
Reexamination cases, formerly distributed to the Technology Centers and assigned to examiners according to technology, are now assigned to a Central Reexamination Unit (CRU). The CRU consists of 52 highly skilled primary examiners who have a full understanding of reexamination practice and are generalists in their field of technology and relevant case law, and concentrate solely on reexamination . . . The units are supervised by Supervisory Patent Examiners (SPEs) and each action is conferenced by a panel of three including the lead examiner, one SPE/RQAS/TQAS and one other CRU examiner. The goal of the CRU is to close prosecution on all ex-parte reexaminations within two years of filing.
Pre-First Office Action Interviews
Interviews occurring before the first Office action are believed to provide the opportunity for a more focused examination at the earliest stages of prosecution. Pendency of applications that are part of this initiative will be tracked with the expectation that closure will be reached sooner due to the increased communication and discussion of issues taking place earlier in the process. We strongly encourage applicants to take advantage of this opportunity.
Read the Dudas testimony in its entirety here (link)

See also

- Testimony of Robin N. Nazzaro (GAO) (link)

- Testimony of Robert D. Budens (POPA) (link)

- Testimony of Alan J. Kasper (AIPLA) (link)

View the webcast here (link)

"End Software Patents" Launches With Website and Report

Coming in fashionably late to the "great patent reform debate", this organization (covered previously here) "will initially focus on two approaches: 1) assisting corporations that choose to challenge software patents in the courts and at the U.S. Patent and Trademark Office (USPTO) on the basis that patents for software and designs with no physically innovative step have no legal validity, and 2) public education aimed at passing laws to protect software from patent law."

Not to be confused with NoSoftwarePatents.com, End Software Patents has backing from the Free Software Foundation, the Public Patent Foundation (PUBPAT), and the Software Freedom Law Center. It has been reported that End Software Patents has corporate backers, but their identities have been protected to date.

The organization has also published a study (link), titled "State of Software and Business Method Patents" in which it is alleged that:

1) US companies spend $11.4 billion annually on software patent litigation;

2) Software patent infringement suits are increasingly targeted against non-software companies in the general economy, for example, companies who infringe software patents simply by having a website with certain configurations; and

3) Recent rulings and statements by the U.S. Supreme Court and the U.S.
Patent and Trademark Office (USPTO) support the position that software is not
patentable.


Visit their website here (link)

Tuesday, February 26, 2008

Tempering (Over) Zealous Advocacy - Courts Overturn Verdict, Sanction Counsel $10M

"There are only two tragedies in life: one is not getting what one wants, and the other is getting it."

- Oscar Wilde

Medtronic Navigation Inc. v. Brainlab, Civil Action No. 98-cv-01072-RPM, District of Colorado, February 12, 2008

When judges become infuriated over hyper-aggressive litigation, they issue sanctions, and even set aside verdicts. Here, U.S. District Senior Judge Richard P. Matsch did both, after a 13-day patent infringement trial. After a jury returned a $51M verdict, Judge Matsch overturned the verdict, then ordered the lawyers to pay the fees and costs of the opposing side.

One example of the misconduct included plaintiff's repeated comparing of products to establish infringement.
After agreeing that a product-to-product comparison for infringement was improper, counsel nevertheless went forward and compared the defendant's products with the plaintiff's in front of the jury during trial and at closing arguments. A centerpiece for the plaintiff was an FDA letter, where the defendants identified their product as being "substantially equivalent" to the plaintiff's product. Judge Matsch was not pleased with this tactic:
Medtronic’s counsel were experienced patent litigators who understood the differences between the doctrine of equivalents and the FDA process. They knew that BrainLAB’s statements in its FDA submission were not an admission that the BrainLAB products infringed the asserted patents. Indeed, Medtronic as a defendant has argued that admission of similar statements it made in an FDA application would be misleading and unfairly prejudicial. See Cardiovention, Inc. v. Medtronic, Inc., 483 F.Supp.2d 830, 840-41 (D. Minn. 2007).
Also, after the court issued a claim construction finding prosecution estoppel, plaintiff's counsel stated later to the jury: “this whole notion that whatever happened in the patent office on this patent, that somehow it was a limitation, is just nonsense.”

Concluded the court:
The conduct of . . . counsel constituted much more than a few instances of overstepping during a hard-fought battle. This case involved complicated technology. Patent law is complex and not intuitive to the average juror. Parties and counsel have an obligation to refrain from seeking to take advantage of those complexities by employing misleading strategies.

[A]fter the Court issued its claim construction rulings, Medtronic’s counsel proceeded cavalierly, with reckless indifference to the merits of Medtronic’s infringement claims. The continued prosecution of a claim after its lack of merit has become apparent warrants sanctions under § 1927 . . . At trial, [counsel's] conduct was in disregard for the duty of candor, reflecting an attitude of “what can I get away with?” Throughout the trial, the [] lawyers artfully avoided the limitations of the patent claims and created an illusion of infringement. They did so with full awareness that their case was without merit.
Read/download the order here (link)


Depuy Spine, Inc. v. Medtronic, Civil Action No. 01-10165-EFH, District of Massachusetts, February 25, 2008

From the order:
Throughout trial, the defendants demonstrated a failure to accept the claim construction governing this case. In fact, with the exception of their ensnarement argument, their defense to infringement appears to have been wholly based on an attempt to obscure, evade, or minimize the Federal Circuit’s construction of the patent-in-suit (the ‘678 patent). Even as early as the defendants’ opening statements, they essentially urged the jury to adopt an interpretation of the patent claims developed by their experts instead of the construction mandated by the Federal Circuit.
Apparently, news traveled fast from Colorado to Massachusetts, as Judge Harrington picked up on Judge
Matsch's order from two weeks earlier:
As Judge Richard Matsch of the District of Colorado has recently observed, “Patent law is complex and not intuitive to the average juror. Parties and counsel have an obligation to refrain from seeking to take advantage of those complexities by employing misleading strategies.” . . . The defendants here clearly sought to take advantage of the technical and legal complexities inherent in this case.
And now, the kicker:
The defendants prolonged the proceedings unnecessarily (thus unduly imposing upon the jury’s time), they sought to mislead both the jury and the Court, and they flouted the governing claim construction as set forth by the Federal Circuit. Under these circumstances, the Court concludes that it is proper to impose a penalty of ten million dollars.
View/download the order here (link)

Monday, February 25, 2008

Bilski Presentation Tomorrow in Chicago

Tomorrow I'll be a featured speaker at the Chicago Bar Association's (CBA) Section of Intellectual Property Law, discussing the upcoming Bilski case and the state of patentable subject matter.

The presentation should start shortly after 12:00PM, and is expected to last about an hour (MCLE Credit is available). If you're in the area (and you have your snow boots on), feel free to stop by and say hello.

For more information, visit http://www.chicagobar.org/ or call (312) 554-2000.

The CBA is located at 321 S. Plymouth Ct., Chicago, IL 60604.

CAFC Creates Potential Conflict in De Nove Review of MPF Claims

Aristocrat Tech. v. Multimedia Games, Inc. (2007-1375), February 22, 2008, Non-Precedential

Aristocrat appealed the order from the Central District of California entering summary judgment of invalidity for indefiniteness of their patent. Multimedia filed a motion for summary judgment arguing that a disputed claim was invalid for indefiniteness, because the specification of the patent failed to disclose necessary structure corresponding to several of the means-plus-function limitations. The district court agreed with Multimedia and concluded that the claims were invalid as indefinite.

One of the disputes surrounded the construction of "control means." Aristocrat argued that the term as claimed was not in means-plus-function (MPF), because one skilled in the art would recognize it as a processor, and because the "subsidiary" limitations (e.g., memory, programming, etc.) together provided enough structure to escape 112, paragraph 6. The CAFC disagreed, but added:

[W]e do not agree with the apparent argument by Multimedia that subsidiary means-plus-function limitations can never define sufficient structure to rebut the presumption concerning means-plus-function treatment of a parent clause on the ground that they only recite additional functions . . .The structure of a parent means clause must be disclosed in terms of the functions that the claim states the means performs. Here, it is not clear that the structures allegedly associated with the subsidiary means as a whole are capable of performing all of the functions associated with the parent means. However, under different circumstances it may be possible that once identified, structures corresponding to the subsidiary means-plus-function limitations may as a whole sufficiently recite the structure for performing the superior function such that resort to the specification for further corresponding structure is not necessary. Because that is not the case here, we conclude that the presumption of means-plus-function treatment applies, and "control means" should be construed as a means-plus-function limitation subject to having structural support in the specification.
Identifying the claims as MPF, the CAFC then concluded that additional factual determinations were needed to properly construe the claims
We conclude that genuine issues of material fact exist concerning whether one skilled in the art of computer programming would identify structure in the specification associated with the various asserted claim limitations, thereby precluding summary judgment, and we thus reverse the district court’s summary judgment order.

What's the big deal?

In Chiuminatta Concrete Concepts, Inc. v. Cardinal Industries, Inc., 145 F.3d 1303 (Fed. Cir. 1998), the CAFC held that MPF claim construction is a legal matter, subject to de novo review under Cybor:

A determination of the claimed function, being a matter of construction of specific terms in the claim, is a question of law, reviewed de novo. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed.Cir.1998) (en banc); Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed.Cir.1995) (en banc), aff'd, 517 U.S. 370 (1996).”

This would explain why the opinion was issued as nonprecedential. But the implication seems clear: the rethinking of Cybor de novo review may well be underway.

See Hal Wegner's article "Rethinking Cybor De Novo Review: Inherent Factual Determinations" (link)

Sunday, February 24, 2008

Unmasked: The Patent Troll Tracker Steps Forward

Less than 6 months after having a bounty placed on his identity (recently upped to $15k) by Ray Niro, the Patent Troll Tracker has stepped forward and revealed himself - he is none other than Rick Frenkel, Director of Intellectual Property at Cisco Systems, Inc. (see his LinkedIn profile here).

According to Rick:

I got an anonymous email, from the guy who probably collected the bounty, telling me I better tell everyone who I am (and he clearly knew), or else he would take care of it for me. The clear threat in the email is that he would do it in a way I wouldn't be happy about. I don't know what that means, but as I have been growing weary of anonymity anyway, here I am.
View his "coming out" post here (link).

Thursday, February 21, 2008

Thomson Publishes Patent Focus Report for 2008

Joff Wild, editor of Itellectual Asset Magazine, author of the IAM Blog, and contributor to Thomson's Knowledge Newsletter, has issued the "Patent Focus Report for 2008." In the report, Joff looks at the patent activity for China, Europe, Japan, India and the U.S., and provides some interesting findings:

China

During 2007, SIPO received 694,153 patent applications covering three types of patent: invention, utility and design. This number may at first sight seem huge, but it does not tell the full story. The overwhelming number of applications — almost 450,000 — was for utility and design patents, which are not subject to substantive examination. Only invention patents receive full scrutiny and there were 245,161 of these submitted during 2007.

What is interesting to note, however, is the increasing proportion of invention patent applications coming from within China. In 2006, they represented just over 58 per cent of the total number of applications to SIPO, in 2007 this increased to almost 63 per cent. This increase was despite an increasing number of applications from abroad: 92,107 compared to 88,172 in 2006.

[A] study of reported decisions in IP cases during 2007 suggested that if rights owners appear before the Chinese courts they have a 75 per cent chance of having the eventual decision go in their favour. This is the case whether the plaintiff is Chinese or from abroad. During 2006, there were more patent cases filed in China than in any other country, and while 98 per cent of these involved only Chinese companies, in the two per cent featuring a plaintiff from outside the country, the foreign entity ended up victorious 90 per cent of the time.


Europe
Although there was a five per cent rise in applications, the number of grants increased by 17.9 per cent. The United States, Germany and Japan continue to be the countries from where most applications come, and these three countries also get more grants than any others. One notable statistic is that the proportion of filings coming from the members of the European Patent Organization fell by a percentage point to 48.5 per cent. France and the Netherlands respectively follow Germany to make up the top three European countries from where applications are submitted.

Also at the end of 2007, the EPC 2000 — the revised version of the European Patent Convention — came into force. Although it has little effect on substantive patent law in Europe, EPC 2000 will have a significant impact on procedure, including the elimination of the need for translations during the application stage, and the elimination of the need to file drawings, claims and a description to obtain a filing date for a European patent (instead applicants can refer to previously submitted material in other countries). Of great significance is that communications between European patent attorneys and their clients will now be subject to privilege. Previously this had not been automatically the case and was instead a case for national jurisdiction.

India
The patent office is struggling to cope as applications rise. Despite the increased workload, the four offices that handle examinations — Kolkata, Delhi , Mumbai and Chennai — have under 200 examiners in total. Recruitment has proved difficult and the attrition rate is high: the Mumbai Mirror reported in August 2007 that one-fifth of staff had left their posts in the previous two years. This is one of the reasons why applicants wait an average of two years before the examination process begins. However, there does seem to have been a surge in the number of patents being granted, if recent reports are correct. During the Indian patent office's current fiscal year, which finishes at the end of March 2008, over 10,000 awards have so far been made. This figure is significantly higher than the 7,500 granted for the whole of 2006/07 and the 4,320 granted during 2004/05. Of course, it also begs the question of just how much scrutiny these patents have received given the low numbers of examiners currently employed.

Japan

The Japan Patent Office (JPO) annual report, issued in November 2007, showed that the number of patent applications in 2006 decreased by 4.3 per cent to 408,674. In its commentary on these figures, the JPO explained that one of the main reasons for the fall was the increasing emphasis that Japanese companies place on keeping their inventions confidential, to help prevent technology leakage.

The number of requests for examination at the JPO also showed a slight downward trend in 2006. In 2005, it was 396,933 (up 21 per cent on 2004), but this fell by four per cent to 382,116 in 2006. This is still a huge number, which can be explained by changes to Japanese patent law in 2001: these stated that requests for examination of applications submitted after October 1 that year had to be made within three years, rather than seven (under the previous law). This change left a number of active applications that were not covered by the new rules and which are now working their way through the system alongside all the applications submitted under the new three year time limit. The office expects the number of requests to peak within the next two years and then to drop.

[W]orrying news for successful applicants looking for certainty post-grant is that, according to research released in April 2007, Japanese courts find against patentees in 90 per cent of the cases that they hear. Speaking at the 15th Fordham Conference on International Intellectual Property Law & Policy, Mr Eiji Katayama told delegates that he had found that of the 37 final trial decisions issued by the Tokyo and Osaka district courts during 2006, 33 had ended with a finding of non-infringement. Of these, two-thirds were decided on the basis of invalidity, while over 85 per cent of the invalidity findings related to the lack of an inventive step or obviousness.

United States
The US Patent and Trademark Office (USPTO) report on the fiscal year 2007 (which ended on 30 September 2007) was a document not lacking in optimism. Among the highlights it chronicled were that the office examined 362,227 patent applications between 1 October 2006 and the end of September 2007: the highest number ever. At 96.5 per cent, quality compliance equalled the previous year's achievements, which were themselves the best in 25 years; while patent examiner decisions were upheld by the patent appeals board 69 per cent of the time, compared to 51 per cent in 2005. Perhaps most noteworthy was that while in 2000, a record high of 72 per cent of all patent applications were granted by the office, that figure has now fallen to 51 per cent, which gives the USPTO comparable approval rates to both the JPO and the EPO.

Read the report in its entirety here (link)

Download a PDF copy of the report here (link)

Download a PDF copy of the report in Japanese here (link)

Wednesday, February 20, 2008

ND Cal.: Late Claim for Inventorship Barred by Laches

Mark Moore v. Broadcom Corp. (c06-05647), February 12, 2008

While working at Intermec, Inc., inventor Beard filed for a provisional application in 1997 that was ultimately converted and issued as a U.S. patent. Right around the same time, Beard was collaborating with Moore to start a new venture, and they discussed various concepts that were subsequently patented. During their discussions, Moore was shown Beard's provisional patent, in which Beard was listed as the sole inventor. Beard later assigned his patent to Intermec.

After a series of assignments, Broadcom became the sole owner of the Beard patent.

In 2006, Moore sued Beard and Broadcom seeking to be declared a co-inventor of the Beard patent, and also sought damages for unjust enrichment. The defendants moved for summary judgment, arguing that Moore's claim was barred by laches.

Relying on the CAFC's Aukerman and Advanced Cardiovascular decisions, the district court acknowledged that laches would be presumed upon proof that the omitted inventor delayed filing suit for more than 6 years after actual or constructive knowledge.

The Court first determines if the presumption of laches applies to the instant case. In infringement actions, the period of delay “is measured from the time the plaintiff knew or reasonably should have known of the defendant’s alleged infringing activities to the date of suit” but cannot begin prior to the issuance of the patent. Aukerman, 960 F.2d at 1032. However, in cases for correction of inventorship, the Circuit has held that “[w]hen applying the equitable doctrine of laches in order to bar a claim, the period of delay is measured from when the claimant had actual notice of the claim or would have reasonably been expected to inquire about the subject matter” and not from the date of the issuance of the patent. See Advanced Cardiovascular Systems, 988 F.2d at

Here, Defendant Beard provided Moore with a copy of the provisional application around December 31, 1997, the date that the provisional application was filed. Moore was aware of the contents of the provisional application on or about December 31, 1997, and was aware that he was not named as an inventor on the provisional application. Thus, Defendants argue, more than eight years passed between the moment Plaintiff knew, or reasonably should have known, that Defendants had filed an application for a patent on the invention, and failed to name him, and the time Plaintiff filed suit.
Expanding upon Advance Cardiovascular, where the omission was discovered after the patent had issued, the district court stated that,

While not discussed in Advanced Cardiovascular Systems, pursuant to 35 U.S.C. § 116, correction of inventorship may be accomplished prior to the issuance of a patent by application to the commissioner. See 35 U.S.C. § 116; 37 C.F.R. § 1.48. In addition, an action to correct inventorship while the patent application is still pending, under 35 U.S.C. § 116, includes the requirement that such amendment must be diligently made . . . The requirement of diligence supports a finding that delay is discouraged, and laches may apply, even at these early stages. Thus, the rationale of Advanced Cardiovascular Systems, that laches may apply at any time that inventorship may be remedied but should not apply before the omitted inventor has learned of the claim, applies in equal force to the time during which a patent application is pending, but before it is issued.
Applying the presumption of laches, the district court found that Moore could not overcome the presumption, and granted summary judgment in favor of the defendants.

Read/download the opinion here (link)

Tuesday, February 19, 2008

KSR Invades Preliminary Injunctions at the CAFC

Erico Int'l Corp. v. Vutec Corp. (2007-1168) February 19, 2008

After surviving reexamination, Erico alleged that their J-Hook patent was being infringed by the defendants. While one of the defendants assured Erico that they would stop selling the allegedly infringing product, they "sold the very products it promised to retain and continued to manufacture and sell knock off J-Hooks."

The district court granted Erico's motion for a preliminary injunction. In defending against the motion, it was argued, among other things, that the patent was invalid due to obviousness. The documents relied upon for obviousness were (1) a reference that was considered by the PTO during reexamination, combined with (2) a new reference (the "EAI/TIA spacing standards" document). The district court did not find the obviousness arguments persuasive, noting that "the [PTO] had sufficient information before it during its prior examinations to assess the very obviousness claim [defendant] now raises, and because secondary considerations of nonobviousness cut in [Erico's] favor."

Vacating the preliminary injunction, the CAFC concluded that the prior art posed a "serious challenge" to the validity of the patent. Citing KSR and Dystar, the court found that "it is reasonable to infer that one of ordinary skill would have considered the [reexamination reference] coupled with the EIA standards and common knowledge within the art as shown by Mr. Laughlin's testimony to explain that Claim 17 is vulnerable based on invalidity."

The court also noted that, for the purposes of preliminary injunctions,

a defendant need not prove actual invalidity. On the contrary, a defendant must put forth a substantial question of invalidity to show that the claims at issue are vulnerable. Thus, a showing of a substantial question of invalidity requires less proof than the clear and convincing standard to show actual invalidity.
Judge Newman, dissenting:
[The Supreme Court] explained that "[t]he purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held" . . . The question here on appellate review is whether the district court abused its discretion in deciding to maintain the status quo during this litigation.

The district court decided that the status quo should be preserved during this litigation. In overturning that decision, the panel majority mistakes the law, misplaces the burdens, misconstrues the assumptions, and ignores the district court's discretionary authority and its balance of the equitable aspects. The panel majority does not explain how the district court abused its discretion, nor is recognition given to the standard of review whereby, as this court has stated: "A decision granting a preliminary injunction will be overturned on appeal only if it is established that the district court made a clear error of judgment in weighing relevant factors, or relied on incorrect law or on clearly erroneous factual findings."

Monday, February 18, 2008

Monday Shorts - Business Method Challenge at the CAFC

Bye Bye Business Methods? The CAFC decided, sua sponte, to order an en banc rehearing of In Re Bilski. The following 5 questions were presented:

1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?

2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?

3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?

4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?

5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

See more details over at Patently-O (link), along with related briefing on similar matter in the Metabolite v. LabCorp case (link1, link2, link 3)


Chief Judge Michel Weighs In (Again) On Patent Reform: Chief Judge Michel gave the keynote speech at the Association of Corporate Patent Counsel on January 28, 2008. The following is an excerpt of the address:

When I joined the court almost 20 years ago, 90 percent of our cases were from completed trials, bench trial or jury trial. Now, today, between 70 and 80 percent of our cases are from summary judgments. So we already have a huge number of interlocutory [appeals], i.e., pretrial appeals where the critical issue is claim construction. So the question becomes, well, do we need a lot more of those? Are we missing a large portion of the cases in which the claim construction is so decisive that we better have an immediate appellate review of the district judge’s construction? Well, maybe so but it’s not obvious to me that it’s the case and the [Senate] report, at least as I read it, doesn’t make much of a case, and it certainly shows no awareness at all of the fact that the vast majority of our appeals are pretrial appeals and do turn on claim construction.
Read the entire transcript here (link).


PTO Releases Prior Copies of MPEP: On February 7, the PTO announced that all prior editions and revisions of the MPEP are available in PDF format on the MPEP webpage (link). An interesting quote from the original 1949 MPEP (section 3) :

An art, process or method is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject matter to be transformed an reduced to a different state of thing. Cochrane v. Deener, 1877 C.D. 242. A method which produces an intangible result, such as transmitting speech by a telephone comes within this definition also.

PTO Updates Declaration Docs and Other Forms: On February 13, the USPTO has modified its Declaration form (PTO/SB/01) to include a checkbox which provides the applicant with the option to preauthorize the EPO and JPO to access its US application(s) [in order to obtain priority documents]. Essentially, this updated Declaration form bypasses the need to file a separate form PTO/SB/39, "Authorization to Permit Access to Application by Participating Offices." See other form updates here, courtesy of I/P Updates.


CBO Estimates Cost of Patent Reform: On February 15, the CBO estimated the costs of enacting S. 1145:

CBO estimates that enacting the bill would increase direct spending by $26.9 billion and revenues by $25.5 billion over the 2009-2018 period. Much of that change would result from making permanent PTO’s authority to collect and spend certain fees, thus shifting the collections and spending out of PTO’s appropriation account. In total, those changes would increase budget deficits (or decrease surpluses) by $1.4 billion over the 2009-2018 period.

View the entire report here (link)

Thursday, February 14, 2008

Study: "Tough" IP Enforcement Not Only Keeps Competitors in Check, But Also Your Employees

"Don't let your employees do to you what you did to your former boss"

- Golden Rule attributed to Roger Borovoy, former GC at Intel

With all the talk about "spreading innovation", one topic that doesn't get much coverage is one of the most common ways in which knowledge gets diffused throughout industries - employee defections.

Back in 1987, a survey (Levin et al.) confirmed that hiring employees from rivals enabled companies to learn about external technologies more efficiently and, in turn, hastened the rate of imitation. In 1994, a survey (Bhide) of the "100 fastest-growing private companies" found that 71% of the entrepreneurial founders commercialized ideas they had encountered or discovered while working at other companies. More recently (Kerstetter, 2000), a study documents celebrated employee raids designed to gain access to competitors' technologies, claiming that technology companies often live by the adage: "If you have trouble with the competition, simply raid its talent."

Working from this backdrop, Rajshree Agarwal, Martin Ganco and Rosemarie Ziedonis looked at ways in which employers traditionally defended against "knowledge apillovers" to competitors. Finding that trade secrets and non-compete agreements provided limited protection, they turned to patents to see what effects they had on stemming the flow of information when employees leave.

What they found was that companies having reputations as being "tough" in IP enforcement have less knowledge spillover due to inventor mobility. The reputations were not gained by actively pursuing IP litigation against all, or even many, of its employees. Rather, a general reputation of agressively pursuing or defending IP litigation will be enough. Notes the report: "From the source firm's perspective . . . even if the costs outweigh the benefits of being litigious in a particular dispute, the deterrence of future knowledge spillovers can justify the inventment."

From the Abstract:

"Job hopping" by scientists and engineers is an important channel for knowledge diffusion. Little is known, however, about the effectiveness of actions firms take to reduce the outward flow of know-how and talent from their own organizations. Building on theories of reputation-building and strategic deterrence, this study investigates the moderating effects of corporate reputations for "toughness" in the enforcement of patents. Drawing on a unique database of enforcement activity, inter-firm inventor mobility events, and patent citations in the U.S. semiconductor industry, we find that a firm's litigiousness significantly curtails the dissemination of knowledge anticipated from employee departures, particularly to firms that are relatively disadvantaged to fund or withstand a legal dispute (i.e., that are small, young, or private). The overall effects are similar in magnitude for California-based
firms relative to firms headquartered in other states. The study sheds new light on the strategic levers firms use to capture value from investments in human capital and R&D.

Read/download a copy of the study, titled "Reputations for Toughness in Patent Enforcement: Implications for Knowledge Spillovers via Inventor Mobility" (link)

Tuesday, February 12, 2008

Know When to Walk Away . . . And Know When to Run

Thomas & Betts Power Solutions v. Power Distribution, Inc., Civil Action No. 3:O7CV167-HEH, E.D. Va., February 8, 2008

Thomas & Betts (T&BPS) filed a declaratory judgment action against Power Distribution (PDI), claiming patent noninfringement and invalidity. The whole case rested on the construction of the term "circuit board." When the term was construed in T&BPS's favor, it was granted a summary judgment ruling of noninfringement.

Up to this point, the court already wasn't happy with PDI's litigation conduct. Nevertheless, fighting onward, PDI filed a motion for reconsideration, alleging that a wiring harness fell within the Court's interpretation of the term "circuit board," and raised, for the first time, a doctrine of equivalents infringement claim.

Sensing the court had enough, T&B moved for sanctions. The court cheerily complied:

This Court's claim construction, which interpreted "circuit board" as requiring an "insulated board," clearly determined the issue of infringement. Instead of recognizing this fact, PDI continued to assert infringement, first arguing that, contrary to this Court's clear claim construction, insulated sensors mounted on a bare metal strip were sufficient to create an "insulated board." This Court rejected that interpretation . . . Nonetheless, PDI continued to advance alternate theories of infringement well after this Court granted T&BPS's Motion for Summary Judgment, filing numerous requests for extensions as well as a Motion to Reconsider.

When presented with the opportunity to justify its conduct, PDI could not provide any ground upon which this Court could find that it had a good-faith basis for continuing to pursue its infringement claim. In fact, PDI's actions in response to this motion are equally unsettling. PDI attempts to justify its strategy by asserting that it disagrees with the Court's claim construction. . . . [H]owever, what PDI fails to explain why it continued to pursue an infringement claim in this Court instead of seeking a final order so that it could appeal this Court's claim construction. Instead, PDI needlessly prolonged this litigation for an additional five months.

PDI's representations to the Court during oral argument are equally disturbing. PDI represented to the Court that its pre-existing expert report supported its position and justified further pursuing its infringement claim following the Court's claim construction. The expert report submitted by PDI, even construed liberally in it's favor, did not provide any good-faith basis for continued litigation. PDI then provided a new expert opinion, dated January 28, 2008, four days after PDI's in-court representation. The new opinion offered tenuous and shallow belated support for PDI's theory and cannot justify PDI's conduct[].

PDI's actions throughout the course of this case indicate, by clear and convincing evidence, a vexatious, manifestly unreasonable, and disturbing litigation strategy. The Court finds that this case is "exceptional" and that an award of attorney's fees is warranted.
Read the entire opinion here (link)

Once Again: Claim Amendment Sinks DOE

International Rectifier Corporation v. IXYS Corp. (2007-1063), September 11, 2007

Earlier, this case was tried before the CAFC, where the court vacated-in-part and reversed-in-part a summary judgment of direct infringement on patents relating to MOSFET technology. Subsequently at the district court, a jury found IXYS infringed patents under the doctrine of equivalents. IXYS appealed (again).

One set of claims required that the semiconductor wafer include a “lightly doped” region that is “adjoining” a “region of opposite conductivity type.” On appeal, IXYS argued that an amendment during prosecution adding the word "adjoining" should have precluded IR from claiming infringement under the doctrine of equivalents. IR responded that: (1) the amendment was broadening, not narrowing, since the claims are directed to structure rather than function, and the “adjoining” limitation simply clarified what structure was claimed; and (2) the amendment in question was "only tangentially related" to the asserted equivalent.

The CAFC did not find IR's arguments convincing:

IR is correct that the amendment broadened the claim in certain respects . . . At the same time, however, IR chose to introduce the term “adjoining.” This term excludes structures that might have been covered by the original claim language, because the “support body” of the old claim . . . was only required to “support[] said lightly doped major body portion,” not necessarily to touch it. The amendment therefore narrowed the scope of the claim, at least with respect to the addition of the term “adjoining.” Under such circumstances, IR cannot argue that the amendment was broadening merely because it eliminated some claim limitations.

As to IR’s second argument, we disagree with IR that the purpose of the amendment was tangential to the asserted equivalent . . . IR is correct that the claim is not necessarily limited to a particular mode of operation, but rather covers a particular structure that, in practice, may or may not function in unexpected ways. However, IR’s decision to claim that structure using the limiting term “adjoining,” whether or not required to overcome the rejection, cannot be described as only tangentially related to the equivalency of a structure with non-adjoining regions. With the amended language, IR recited precisely the structure it disclosed, and thereby overcame the examiner’s § 112 rejection.

[T]he damages award and permanent injunction are vacated. IXYS is entitled to entry of final judgment in its favor as to all claims. There shall be no further proceedings in this case regarding any questions of infringement, either literally or under the doctrine of equivalents.
REVERSED

Monday, February 11, 2008

In Re Nuijten: En Banc Denied

In Re Petrus A.C.M. Nuijten, (2006-1371) Fenruary 11, 2008

In a 9-3 decision, the CAFC denied Nuijten's petition for panel rehearing and rehearing en banc. Judges Linn, Newman and Rader dissented from the denial, stating that the law surrounding 35 U.S.C. §101 is in a "conflicted" state:

[O]ur decision conflicts with our own precedents as well as those of the Supreme Court . . . It conflicts with our own precedent because our predecessor court’s decision in In re Breslow, 616 F.2d 516 (C.C.P.A. 1980), forecloses the majority’s conclusion . . . that something "transient" or "fleeting" cannot constitute a "manufacture" under 35 U.S.C. § 101. And it conflicts with Supreme Court precedent because it ignores the Supreme Court’s analysis of how, in general terms, § 101 is to be construed. As the Court discussed in Diamond v. Chakrabarty, patentable subject matter includes "anything under the sun that is made by man" except for certain enumerated exceptions: "The laws of nature, physical phenomena, and abstract ideas have been held not patentable." 447 U.S. 303, 309 (1980). The majority’s narrow construction of "manufacture" ignores this framework.
Also, the dissent argued that the Nuijten holding muddles the distinction between § 101 and § 103, as the PTO considers data per se to be "printed matter" under Lowry, and thus cannot form the sole basis for nonobviousness:

In addition, this case raises important questions about the relationship between § 101 and § 103. In this case, we affirm the PTO’s rejection of claims to a signal simpliciter, but the PTO has allowed a claim to a storage medium containing the very same signal, on the grounds that the storage medium is a manufacture that can be rejected, if at all, only under some provision other than § 101. In particular, the PTO considers the patentability of such claims under the "printed matter" doctrine of § 103. See In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994). These distinctions make no practical sense and are poorly supported by precedent, which, to the contrary, requires a more holistic approach to the question of whether a claim is directed only to an unpatentable abstraction or whether it is directed to a patentable application of such an abstraction to an otherwise statutory invention . . . The distinctions that are drawn between signals and storage media containing those signals would appear to apply equally to the distinctions between software and hardware and are artificial at best.
The stage is set: with the current denial, the case may likely go to the Supreme Court for certiorari review. If certiorari is not sought or granted, expect further inter-panel disputes until the matter is resolved by an en banc court.

Download the opinion here (link)

For an example of the PTO's treatment of §§101/103 issues, see Ex Parte Nehls et al., Appeal 2007-1823, Decided: January 28, 2008 (alleged non-statutory feature to be considered for the purposes of 101, but same feature considered "nonfunctional descriptive material" for the purposes of 103) (link)

Sunday, February 10, 2008

Tafas v. Dudas: Continuation Rules Oral Argument Recap

On Friday, Judge Cacheris heard oral arguments from Tafas, GSK and the USPTO on three motions for summary judgment regarding. As was expected, the blog coverage was fast and furious, but ultimately, Judge Cacheris decided to take the matter "under advisement," agreeing to issue an opinion at a later date, noting that "there is a lot of paper to consider" (see the court's minute entry here).

Blogosphere Observations:

(1) Everyone had their "A" game: The court, and all appearing parties, were well-prepared and meant business. The PTO (represented by Lauren Wetzler and Steve Walsh) was more polished in contrast to the preliminary injunction arguments. Judge Cacheris shot off multiple pointed questions that left both sides playing catch-up through parts of the proceeding.

(2) It's "all or nothing": neither side is proposing "carve-outs" for specific sections of the continuation rule changes. The entire rule will stand or fall as a result of the litigation.

(3) What is the PTO's rule making authority? A good portion of the arguments centered around the PTO's rule making authority, governed by 35 U.S.C. § 2(b)(2), stating the the Office "may establish regulations, not inconsistent with law, which-

(A) shall govern the conduct of proceedings in the Office; [and?/or?]

(B) shall be made in accordance with section 553 of title 5 [of the Administrative Procedure Act (APA)]."

The plaintiffs submitted that section 2(b)(2) required that both requirements had to be met in order for the continuation rules to be effective. As the PTO did not follow the provisions of section 553 (notice/comment), Plaintiffs argued that the rules were void. The PTO countered that the Office had authority from Congress to enact the continuation rules as presented, without having to meet every requirement of the APA.

(4) Are the PTO Rules "substantive"? The remainder of the arguments surrounded the issue of whether or not the PTO's continuation rules were "substantive" as opposed to "procedural." Tafas/GSK argued that, since the rules were substantive in nature (i.e., changed the manner in which patentable subject matter could be claimed), the PTO inherently lacked authority to implement the rules.

The PTO responded that the rules were reasonable "procedural" restrictions that would aid the PTO in curbing the avalanche of [continuation?] applications at the PTO. Nevertheless, the PTO appeared to concede that substantive rules could not be applied retroactively, adding that changes to the FRCP have been routinely applied to pending litigation without any trouble.

From Around the Horn:

See John White's play-by-play coverage of the oral arguments at the PLI Blog (link1) (link2).

Listen to John's audio report here (link), as well as Bob Spar's audio report (link).

Read Jill Browning's detailed report at Patently-O (link).

More from Patent Hawk (link) and Patent Baristas (link).

See the current docket report from Justia here (link)

Thursday, February 07, 2008

E.D. Va: Contents of Inequitable Conduct Must Be Stated With Particularity

Applied Interact LLC v. Continental Airlines, Inc., Civil Case No. 2:07cv341 (E.D. Va., January 17, 2008)

Applied Interact ("AI") filed a complaint against Continental and MN Airlines alleging that they infringed 5 patents "by [their] unlicensed use of printing boarding passes over the Internet," and infringing another patent "by [their] unlicensed use of sweepstakes conducted over the Internet."

In the Answer, the defendants pled an affirmative defense alleging inequitable conduct:

The [five (5)] Patents are unenforceable because of the actions of at least one individual, substantively involved in the prosecution of the applications that led to the issuance of the [five (5)] Patents, misrepresented the state of the prior art during prosecution of each identified patent and/or failed to disclose to the United States Patent and Trademark Office material information known to those substantively involved in the prosecution of the applications that issued as the identified patents.

On information and belief, the individuals involved in the failure to disclose material information include [various prosecuting attorneys and inventor]. At no time did these individuals provide any references or prior art to the Patent Office with respect to the use of computer networks to print at a remote location information generated at a central location and/or information related to the use of computer networks to implement games of random chance during the pendency of the applications that led to the issuance of the [five (5)] Patents. The individuals involved in the failure to disclose material information also include individuals who were substantively involved in the reexamination of [one (1) of the] Patent[s] that, on information and belief, include: [names of individuals].

On information and belief, the information that was withheld includes information that is material to the scope of the claims currently advanced by Applied Interact including, but not limited to information concerning: [7 features of the claimed invention].

On information and belief, the withheld information was known by the individuals to have been material and the failure to disclose prior art to the Patent Office was made with intent to deceive the United States Patent and Trademark Office into improperly issuing the identified patents or a reexamination certificate for the same.


AI moved to strike this defense under FRCP Rule 12 ("the [C]ourt may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter") and Rule 9 ("[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.")

In weighing whether the affirmative defense of inequitable conduct was properly pled, the Court considered whether the pleading specified:

1. The time of the inequitable conduct;

2. The place of the inequitable conduct;

3. The parties responsible for the inequitable conduct; and

4. The contents of the inequitable conduct.

Here, there wasn't much argument over the first 3 factors, but the court questioned whether the "contents of the inequitable conduct" was sufficiently pled. AI contended that "Continental's Amended Answer fails to state its inequitable conduct defense with particularity because (1) it does not identify any misrepresentation; and (2) it does not identify any specific prior art that was withheld."

The court agreed with AI, stating that the pleading "merely describe[s] the subject matter of the material omitted but do not state with specificity the documents or information omitted." Additionally, the court ruled that:

Continental's pleading . . . [describes] omissions that relate "to the subject matter [of the patent], namely, the use of computer networks to print at a remote location information generated at a central location and/or information related to the use of computer networks to implement games of random chance." . . . However, this description of the material omissions constituting the inequitable conduct does not provide Plaintiff with "guidance as to the specific [information]" allegedly withheld. . . . While Continental claims some information should have been submitted regarding these subject areas, Continental fails to allege any specific document or information that should have been produced.

[T]he Court additionally concludes that Continental's pleading is defective in so far as it references the entire patent as being affected by the material omissions. Rather, Continental must state with specificity what aspects of the patent were implicated by the complained of material omissions.

Motion to strike Affirmative Defense GRANTED

View/download the opinion here (link)

Wednesday, February 06, 2008

Close Call at the BPAI - Near-Precedential Decision Sinks Computer Claim Under Utility Requirement

Ex Parte Nehls et al., Appeal 2007-1823, Decided: January 28, 2008

After a busy Summer in 2007, the BPAI has been (ominously?) quiet as of late, issuing no precedential opinions since Ex Parte Catan in July 2007, and only issuing 4 informative opinions during the same time.

In Ex Parte Nehls, the BPAI came close to breaking their silence, where Chief Administrative Judge Fleming, along with Administrative Patent Judges Adams, Grimes, Green, Linck, Prats and Fredman decided a controversial case over an application that claimed a computer-based system for comparing nucleic acid sequences:

13. A computer-based system for identifying nucleic acid fragments of the human genome of commercial importance comprising the following elements:

a) a data storage means comprising the sense or antisense sequence of at least 18 contiguous nucleotides of any one of SEQ ID NOS:9-1,008;

b) search means for comparing a target sequence to each of the sequences of the data storage means of step a) to identify homologous sequence(s); and

c) retrieval means for obtaining said homologous sequence(s) of step (b).
The claims were rejected by the Examiner under 35 U.S.C. §§ 101 and 112, first paragraph, on the basis that the Specification did not disclose a patentable utility for the claimed computer system comprising SEQ ID NO: 9 in its data storage means.

Under the CAFC's decision in In re Fisher, § 101 requires a utility that is both "substantial" and "specific." The court held that a substantial utility requires showing that “an invention is useful to the public as disclosed in its current form, not that it may prove useful at some future date after further research. Simply put, to satisfy the ‘substantial’ utility requirement, an asserted use must show that that claimed invention has a significant and presently available benefit to the public.”

Turning to the claims, the BPAI summed up the issue this way:
Here, the claimed computer system is disclosed to be useful for identifying nucleic acids that are similar to SEQ ID NOs 9-1008 . . . The utility of the claimed computer system therefore depends on the utility of the nucleic acids of SEQ ID NOs 9-1008: if the disclosed nucleic acids lack utility, so do nucleic acids similar to them and a computer system for identifying such similar nucleic acids.
Finding that the gene trapped sequences (GTSs) (SEQ ID NOs 9-1008) were mere "research intermediaries", the majority decided that such a disclosure lacked utility:
The uses asserted in the Specification for the disclosed nucleic acids . . . are not “substantial” or “specific,” as those terms were defined by the Fisher court. They are not substantial because . . . the GTSs represented by SEQ ID NOs 9-1008 are “no more than research intermediates that may help scientists to isolate the particular underlying protein-encoding genes and conduct further experimentation on those genes.” . . . Accordingly, the GTSs represented by SEQ ID NOs 9-1008 are merely “objects upon which scientific research could be performed with no assurance that anything useful will be discovered in the end.” The uses asserted for the GTSs represented by SEQ ID NOs 9-1008 therefore do not meet the standard for a substantial utility under § 101.

Nor are they specific utilities, because they could be asserted for any partial cDNA transcribed from any gene in the human genome. Because nothing about Appellants’ asserted utilities sets the nucleic acids of SEQ ID NOs 9-1008 apart from any other human cDNA fragment, Appellants have only disclosed general uses for the disclosed GTSs, not specific ones that satisfy § 101.
Now, here's the rub - in deciding an obviousness issue on the same claim, the majority ruled that "the particular sequence data recited in claim 13 is nonfunctional descriptive material and does not distinguish the claimed computer-based system from the prior art system that is the same except for its sequence data" (emphasis added). Adds the opinion:
Here, the descriptive material (SEQ ID NOs) recited in the claims is not functional material like the data structures in Lowry. There is no evidence that SEQ ID NOs 9-1008 functionally affect the process of comparing a target sequence to a database by changing the efficiency or accuracy or any other characteristic of the comparison. Rather, the SEQ ID NOs are merely information being manipulated by a computer; the SEQ ID NOs are inputs used by a computer program that calculates the degree of similarity between a target sequence and each of the sequences in a database. The specific SEQ ID NOs recited in the claims do not affect how the method of the prior art is performed – the method is carried out the same way regardless of which specific sequences are included in the database.

APJ GREEN, dissenting-in-part:
The position of the Majority is inconsistent. It is unfair to Appellants to rely primarily on the sequence data to find that the claims do not meet the utility requirement of 35 U.S.C. § 101, and then state that the sequence data are only nonfunctional descriptive material that does not contribute to the patentability of the claim under 35 U.S.C. § 103(a). Which is it?

I agree with the Majority’s analysis under 35 U.S.C. § 101 that the claimed SEQ ID NOs do not have patentable utility, and thus concur in the result. I do not agree, however, that the SEQ IDs are nonfunctional, descriptive subject matter, which should not be considered in the obviousness analysis. I thus respectfully dissent as to the Majority’s opinion as to the obviousness analysis.
APJ ADAMS, dissenting-in-part:
Along the way the majority engages in a metaphysical discussion of the difference between nucleic acid molecules and SEQ ID NOS . . . Cutting through the chaff, there is no doubt that SEQ ID NOS per se are data, and if Appellants had simply claimed SEQ ID NOS per se, the claims would properly be rejected under 35 U.S.C. § 101 as directed to patent ineligible subject matter. This is, however, not what Appellants have claimed, and a rejection of the claims as drawn to patent ineligible subject matter under 35 U.S.C. § 101 is not before this panel for review.

Nevertheless, the majority blends the concept of patent eligible subject matter under 35 U.S.C. § 101 with the “printed matter” doctrine under 35 U.S.C. § 103 to arrive at their conclusion that the claimed invention is obvious over a prior art reference that does not teach the SEQ ID NOS recited in Appellants’ claims.

Accordingly, I cannot join with the majority’s analysis of the record.
View/download the 53-page opinion here (link)

- Some interesting remarks from the footnotes in this case:

Footnote 3: "The Lowry [CAFC] court did not consider whether, and under what circumstances, computer-readable information that is analogous to printed matter can distinguish a claimed invention from the prior art."

Footnote 4: "a claim to a computerized system for searching a phonebook placed in a database would not be patentable, absent some novel and nonobvious characteristic of the computer hardware or search tools."

Footnote 5: "MP3 files encoding different songs will cause a computer’s speaker to output different music, but music is a paradigmatic nonfunctional descriptive material. Descriptive material is not functional merely because it results in different outputs when acted on by a computer program."

Tuesday, February 05, 2008

Patent Reform - Letters Ho!

Now that S.1145 is heading into the final stretch, more and more position letters are being sent to congressional members and fellow practitioners, voicing support and opposition to specific provisions of the Act.

Bush Administration Letter:

Yesterday, the Assistant Secretary of Commerce for Legislative and Intergovernmental Affairs Nathaniel F. Wienecke voiced the Administration's strong opposition to damages apportionment and to express support for "Applicant Quality Submissions" (AQS) and a "second window" for oppositions.

Regarding damages, the Administration indicated that apportionment would be a "deal killer." Quoting from the letter, "[t]he Administration continues to oppose Section 4, 'Right of the Inventor to Obtain Damages.' Consequently, we continue to oppose S. 1145 - in its entirety - unless Section 4 is significantly revised . . . The Administration does not believe it advisable to create a statutory directive to courts that requires them to rigidly apply, in all cases, only one of the several broadly accepted factors now evaluated by the courts."

On the Applicant Quality Submissions (i.e., mandatory examination support documents), the letter states; "[t]he Administration strongly supports the bill's provisions to promote patent applicant quality submissions. As our patent system confronts increasingly complex technologies, it is critical that patent applications contain basic high-quality information as a requirement, not an option" (emphasis added).

On post-grant oppositions, the letter states:


While we support the structural approach to post-grant review as outlined in S. 1145 (including having a first window of opportunity to challenge a patent within one year of grant, and having a second window throughout the patent life, triggered by a timely notice of infringement and threat of significant economic harm), we believe that improvements are required to make the bill's post-grant procedures more effective, efficient, and manageable. For example, the threshold standards for access to both the first and second-window challenges need to be clarified. Further, the efficiency of the procedures would be improved by applying the estoppel effect for first-window reviews to "issues actually raised," and to "issues that were or could have been raised" for second-window reviews. This will help protect patent holders against claims that are not raised in a timely and appropriate manner. (Emphasis added).
To view the letter in its entirety, click here (link)


PubPat Letter Supporting Inter Partes Reexamination:

Yesterday, Dan Ravicher from PubPat opposed the "second window" of oppositions, and expressed support for continuting inteer-pertes reexaminations:

While a Post Grant Review procedure could provide a way to achieve our public interest goals, the form of Post Grant Review currently proposed in the Senate's bill is a woefully inadequate substitute for reexamination because it would only permit us to question the validity of issued patents within twelve months of issuance. (We are not commercial actors, and thus would never be threatened with infringement, a requirement to request Post Grant Review after twelve months.) Since the true effect of a patent on the public is frequently not realized until well after the first year of its term, there would be no way for us to then have any concerns we may have
regarding its validity addressed. For these reasons, we favor the Patent Reform Act passed by the House last year (H.R. 1908), which, while also creating a Post Grant Review procedure, actually strengthens reexamination.
Read the letter here (link)


Licensing Executives Society (LES) Sample Opposition Letter

The president of the LES communicated in a recent bulletin that approximately 52% of LES members believe that damages apportionment will inhibit innovation. 40% belive that it will fairly apportion the economic value of patents, while 8% believe that the limitations would promote innovation. In a sample "Dear Senator" letter to Congress, the LES has provided language through which appropriate members can express their concerns. An excerpt of the letter is provided below:

As a member of the Licensing Executives Society USA and Canada (LES), I am fortunate to work in a profession that is driven by the innovation and creativity that have shaped the U.S. economy for over 200 years. However, I’ve been troubled by recent debate on the future of the patent system and urge you to seriously consider the consequences some of the significant changes included in legislation currently under consideration. S. 1145, the Patent Reform Act of 2007, includes significant changes to the incentive system that has fueled the American innovation engine, and we should think carefully before making such sweeping changes to this critical source of economic prosperity.

Kaptur Letter to Attorney General Mukasey

Unless you've been living in a hole, you've heard of Microisoft's $44.6B offer to buy Yahoo!. What does this have to do with patent reform? According to U.S. Representative Marcy Kaptur (D-OH-9), there's a connection. In a letter dated February 1, 2008 Kaptur states: "Microsoft is seeking to fundamentally transform the treatment for those entities that infringe on the intellectual property of other innovators by minimizing the damages the victim could receive and to ensure that the potential for harassment would extended dramatically by allowing for virtually endless attacks on patent validity. "

Read the letter here (link)


Wegner Article on Interlocutory Appeals and Cybor

Hal Wegner circulated the following email yesterday, pointing out that, with all the attention being given to damages apoprotionment, the provision for interlocutory appeals also has its own messy baggage to deal with. From the email:

Leahy S. 1145 to many appears to be only about “damages apportionment” – or so its seems from the flurry of activity concerning this most controversial provision. Lost in the weeds is the coup attempted on the Federal Circuit whereby a trial judge would be able to shunt essentially all patent infringement cases to the Federal Circuit for a one year or so breather: The trial court would – per S. 1145 – issue a quickie claim construction and certify the case to the Federal Circuit for an interlocutory appeal which would necessarily be heard by the Federal Circuit; a year or so later, the case would ping pong its way back to the trial court.

Legislatively Overrule Cybor, a Cleaner Solution: If Congress does want to cure the Cybor disease, a far better solution would be to simply legislatively overrule Cybor, a decision long overdue for repeal.
View Wegner's Article here (link).

Friday, February 01, 2008

Ex-PTO Commisioners Weigh in on Patent Reform

Former Commissioners Gerald Mossinghoff & Stephen Kunin are preparing a position paper on various parts of the Patent Reform Act of 2007. In general, they support many of the provisions of the Act, while expressing their reservations on other provisions. Nevertheless, the authors comment that "[t]he time for fair compromises that provide these fixes is now. Too much is at stake to delay."

Sponsored by the 21st Century Coalition, the paper is quite balanced, and holds a mainstream position on all the covered topics (whether or not you personally agree with them). It's a great read for anyone looking to get a fair rundown on all the issues surrounding patent reform (I am told a copy will be sent to the editorial board at The Financial Times - wink, wink )

What follows are excerpts from the paper on selected topics:

First to file:

In 2005, the USPTO did a study of whether the first-to-invent rule advantaged or disadvantaged small entities. Using data from 1983 — when the small-entity status was first defined — through 2004, the USPTO found that the number of small entities disadvantaged by the first-to-invent rule was slightly higher (289) than those advantaged (286).

[T]he USPTO cannot practically hope to handle its workload without effective work-sharing with other patent offices, particularly the European Patent Office and the Japan Patent Office. And such work sharing will not be possible if the U.S. continues to be isolated with an outdated first-to-invent system of priority.

[O]f all of the key recommendations of the NAS that requires legislation, it is our firm opinion that establishing a first-inventor-to-file priority in the U.S. should be at the top of the list.
Post-Grant Review
Although the authors recognize that meritorious arguments can be made on both sides of the issue, we would favor the House-passed Single Window and urge the retention of Inter Partes Reexaminations. The one-year time limit creates a fixed period in which to challenge granted patents on all conditions of patentability and provides incentives for competitors to do so. Conditions of patentability depending upon a search of published patents or publications could then be handled through Inter Partes Reexaminations at any time during a patent’s life. Moreover, until there are iron-clad assurances that diversions of USPTO fee income to unrelated Federal programs will not occur, there is a realistic fear that subjecting the 1.7 million U.S. patents now in force to a “Second Window” Post-Grant Review could result in disastrous resource and administrative problems for the USPTO and the U.S. patent system.
Inequitable Conduct
If full elimination of [the inequitable conduct] defense is not undertaken, Congress should consider at least a “safe harbor” that would apply to valid patents. Under such a “safe harbor,” unless at least one claim of a patent is invalidated by the court, the patent should be immune from any allegations in patent infringement lawsuits that the valid patent was wrongfully obtained through “inequitable conduct.”
Apportionment of Damages
Although intended to guard against allegedly inflated damage awards, this mandatory apportionment test would represent a dramatic departure from the market-based principles that currently govern damages calculations, opponents say. Even worse, it would result in unpredictable and artificially low damages awards for the majority of patents, no matter how inherently valuable they might be. Opponents further argue that this change would undermine existing licenses and encourage an increase in litigation. Existing and potential licensees would see little downside to “rolling the dice” in court before taking a license.
Venue
It is the authors’ view that changes to the venue provisions are not needed at this time. The popularity or consternation about filing patent cases in certain judicial districts waxes and wanes over time. The popularity of the Eastern District of Virginia’s “rocket docket” has faded in the past several years, while the popularity of the Eastern District of Texas grew. Also, certain jurisdictions will always have a disproportional number of patent cases due to the predominance of intellectual property-based industries in that judicial district, which no reasonable modifications to the patent venue provisions would alter. If the Congress determines that changes to the patent venue provisions are warranted, then the authors suggest that there be parity between the venues available to patentees and to alleged infringers.
Interlocutory Appeals
It is unproven that the benefits of interlocutory appeals of Markman orders, as the proponents argue, would actually be realized. Perhaps, the better approach to addressing the perceived problem of larger numbers of Markman reversals would be
to give district court judges’ claim construction determinations greater deference at the Federal Circuit.
Willful Infringement
Given the Federal Circuit’s en banc holding in Seagate, it is the authors’ view that the problems articulated by the NAS have been effectively addressed by the judiciary, and that there is no need for legislation, which at this point would only interrupt and confuse an orderly development of common law based upon Seagate.

Read the paper in its entirety here (link), courtesy of Greg Aharonian.

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